Nike Profits Soar Despite Challenges, Amazon Flat, Bond Market Struggles
September 29, 2023
Nike’s Market Performance
The athletic apparel giant, Nike (NKE), witnessed a post-close increase of 7.9% in its shares on Thursday following a surpass of profit expectations for the quarter. Despite the ongoing decline in margins due to escalating product costs and unfavorable foreign exchange rates, the company was able to counterbalance these challenges through strategic pricing initiatives. This resulted in a predicted further improvement of margins in Q2. Sales in China fell short of estimates due to the prevailing forex headwinds which are expected to persist for a couple more quarters. However, CEO John Donahoe is optimistic about the brand’s growth in the Chinese market, noting “Nike’s market share gains in the region”. He added, “We feel good about the opportunities in China in the coming quarters and into the medium to long term”. The results of this financial period are graphically represented in the linked charts.
Amazon’s Trading Trends
On Thursday, e-commerce giant Amazon (AMZN) maintained a steady trading position, closing at $125.98 a share for the third consecutive day. The unchanging closing price has raised eyebrows as the company has been under scrutiny for several reasons. Recently, the FTC filed a highly anticipated lawsuit against the online retailer. Despite these challenges, SA analyst Tradevestor believes in Amazon’s resilience and continues to support the purchase of its stock. The company’s successful Prime Day event could also face stiff competition, with retail competitors such as Walmart (WMT) and Target (TGT) gearing up for early holiday sales promotions. Amazon’s upcoming report for Q3 earnings and its holiday quarter guidance, which is due in four weeks, are keenly awaited by investors. The question remains – will Amazon retain its closing price of $125.98?
Challenges in the Bond Market
The bond market is undergoing a tough phase, with U.S. Treasury returns currently on track for the poorest performance this year. The downturn follows the Federal Reserve’s signal that interest rates will remain high for an extended period. This announcement has driven the 30-year yield (US30Y) and the 10-year yield (US10Y) to their highest levels in more than a decade. Traders are paying close attention to the Core Personal Consumption Expenditures Price Index – the Fed’s preferred inflation measure – set to be released today. A mild reading is likely to alleviate some market worries. On a related note, billionaire investor Bill Ackman’s strategic bet against 30-year Treasurys has proven profitable. He foresees a further rise in long-term Treasury yields due to persistent high inflation.